Experts close to the case believe the High Court will refer it to the European Court of Justice, where Marks & Spencer will eventually prevail.

If that is the case it could open the floodgates to a host of similar claims, and the Treasury will be facing a deficit of up to £750m.

Barristers representing Marks & Spencer will argue that it should be allowed to offset losses made by its foreign subsidiaries against profits made in the UK. They will claim that article 43 of the EC Treaty, upholds this.